As an agency owner, you likely spend a lot of time thinking about where your next business opportunities will present themselves.

If your agency is like a lot of its peers, the answer might be that your next opportunity is from another agency.

Perhaps it’s because your client needs services that your agency isn’t staffed to offer. Or that another agency wants you to provide your services to their clients. There may be synergies associated with your agencies referring business back and forth to one another strategically. You have likely encountered one or more of these situations in your time doing business, which means you’ve considered entering into what we call a “strategic alliance”.

1. What is a strategic alliance?

A “strategic alliance” is a term that we use as an umbrella description of two agencies that desire to work together in a mutually beneficial relationship to provide services to individuals and clients. This can include situations where you, as an agency, are providing your services to another agency’s clients (either directly or white labeled),  Other strategic alliances might include referral relationships where you pay (or are paid) for a successfully referred client relationship, or a teaming relationship where both agencies might be client-facing on the same work scope.

Strategic alliances generally do not include situations where you are utilizing an individual freelancer or engaging a third party vendor to provide specialized services. These situations bring up their own unique circumstances and legal concerns, and so we treat them separately.

2. What should you look for as a service-providing party?

If you are providing services to your strategic alliance agency’s client (or referring clients to your strategic alliance), there are a few things we recommend keeping in mind.

• Communicate effectively. Ensure that both agencies agree on all details regarding their expectations for the services being provided. Nail down those deadlines, dollars, and deliverables in a contract.
• Understand your limitations. For example, if a strategic alliance agency’s client has specific parameters regarding how their confidential information needs to be treated, you will want to know what those requirements are. If they have specific communication or technological requirements, those should be clearly communicated to you as well. This ensures smooth services and limits your liability.
• Understand your limitations (part two). Your strategic alliance agency likely (and SHOULD have) signed a contract with the intended client. Typically, these agreements have very specific requirements, especially surrounding intellectual property and confidential information. While you may not always be able to receive a copy of the actual client agreement, your partner should inform you of expectations regarding deliverable ownership, confidential information, restrictions on self-promotion, etc. Understand the agency’s agreed obligations to the client before you spend time producing work for that client/
• Distribute liability appropriately. You should not be liable for things that are outside of your agency’s control. When you’re negotiating your strategic alliance agreement, talk to your lawyer to make sure you aren’t opening the door to unnecessary liability.

Speaking of which, bundle all of these items into a well-written Strategic Alliance Agreement. This document will be your roadmap to your collaboration and all clients you work with and/or refer.

3. What should you look for as a service-receiving party?

If you’re engaging another agency to provide you with referrals or to provide your clients with services, there are a few things to consider in your relationship and accompanying contract.

• Communicate effectively. Same as above – it is important that you communicate with your allied agency so that they understand their roles and responsibilities with regards to your clients. This not only means deadlines, dollars, and deliverables, but also any unique restrictions that come with working with any specific client.
• Understand your client contract. Within any client contract, your client may require you to ensure your partners meet certain standards and adhere to certain rules and policies. In some cases, the client may flat-out require that you obtain its approval before you use another agency’to assist in creating the work. Ensure that any of those unique requirements are communicated to your allied agency and, when necessary, incorporate them into your Strategic Alliance Agreement.
• Make ownership match. If you agreed that your client would own 100% of their deliverables, make sure that your strategic alliance agency is signing over full ownership of their contributions to you or your client. If your client agreed to a license, ensure that you receive the appropriate license from your agency collaborator. In any circumstance, the agreements need to be compatible.
• Address financial liability. You don’t want to be on the hook for your strategic alliance partner’s fees if your client fails to pay you. It is important to include language in your contract that states you are only liable to remit payment if the client pays you first. This applies for referral relationships, too, as referral fees should not be paid out unless a client pays you first.

As above, ensure you bundle all of these points into a thoroughly-written Strategic Alliance Agreement. As you add more clients, each client’s unique needs can be addressed in SOWs appended to the original Strategic Alliance Agreement.

4. How do I protect my agency and my people?

We completely understand every agency’s desire to maintain a good, positive relationship with their strategic alliance firms. However, it is still vital that you advocate for your agency and your team members, and that may not always benefit your agency collaborators. We recommend the following to ensure your agency’s protection in these alliances:

• Maintain a non-solicitation clause in your agreements. While the enforceability of these clauses is changing across the country from day to day, we recommend at least a base-level layer of protection against the poaching of your valuable staff members.
• Involve your lawyers. We know that you want to look easy to collaborate with. Negotiations frequently go more smoothly when you have your attorneys advocating on your behalf, and it removes you from any direct conflict. We always appreciated the occasional “Sorry, my mom said no,” moments as kids, right?
• Communicate and document. Communication is the best way to prevent conflict, and paper trails are essential for protecting you when conflict does arise. Especially when your agency alliance firms are working directly with your clients (as opposed to a white-label situation), you will want to be the primary correspondent with your client while also maintaining sufficient transparency into direct communications between your clients and strategic partners.
• Get a contract in place. We can’t stress this enough. These relationships can be very complex, especially as more clients, referral partners, service partners, etc. are added into the mix. Having clear, organized legal documentation is absolutely essential for maintaining healthy relationships and minimizing risk.

5. What type of agreements do you need?

We’ve talked a lot about agreements, but what do you really need for a strategic alliance?

• Non-Disclosure Agreement. Before you form your partnership, consider presenting your future strategic partner with a non-disclosure agreement. This is intended to protect your confidential information, your client’s confidential information, and your partner’s confidential information. That way, even if the parties walk away, there’s still a layer of protection on all items discussed in initial conversations.
• Strategic Alliance Agreement. This, as noted throughout, is the true overarching essential document governing your strategic alliance.
• Referral Agreement. A referral agreement is a slightly different version of a strategic alliance agreement, and it should be utilized in referral relationships. These can be unilateral or mutual, and they need to contain all the details for the relationship including term lengths, referral fees, and conditions for a referral to become “valid”.

No matter what type of strategic alliance you have in mind, talk to your lawyers to determine the best type of agreement for you. While these relationships can be very fruitful, they can also be complex! It’s important to set a good foundation so that your relationship is profitable for everyone.